Hydragas Energy Gas-to Power

Hydragas Energy – Mission

Hydragas Energy Limited is a registered Canadian company. We have started Series-B funding for our projects program. We operate from our Vancouver base. Our funding is to develop a demo extraction plant for Lake Kivu methane. The innovative technology has been proven in an in situ pilot program already. Our next steps are to advance construction of the demonstration and commercial production stages.

Photo of Hydragas Pilot-Plant in 2004 on Lake Kivu during testing program
Pilot-testing Hydragas Technology

Methane Resources & Production

Hydragas Energy innovated its extraction technology to produce methane gas dissolved at depth in Lake Kivu. No other open water bodies are yet producing natural gas in this way. In future there is also massive potential to harvest methane from clathrates (hydrates) in oceanic deposits. In fact, hydrates reputedly make up half the world’s available hydrocarbon reserves. Harvesting the solid-form, oceanic methane hydrates requires scale-up to our gas recovery system design. But ours is a simpler way to do harvest it than failed attempts with conventional deep sea O&G equipment.

Lake Kivu Bathymetric Map with the Resource Trap Demarcated by the Green Isobath (c Data Environnement)

Alternate Applications of Hydragas Energy Innovation

In addition to open water bodies, deep aquifers also trap vast amount of methane formed with coal. Methane, typically as in coal-seam gas (CSG) deposits, exists in vast quantities in Queensland and New South Wales, Australia. Harvesting this methane from aquifers with our equipment is a simple, small-footprint, down-hole process. It is achieved without most of the controversial downsides of current methods used for CSG. In other words, most methane-bearing water sources will be amenable. All can be put into production with versions of Hydragas’s technology. We aim to develop each of these added methods in future, as R&D funding allows.

Other Forms of Methane Resource 

Methane needs high pressure to dissolve and remain trapped in solution. Methane can remain fully dissolved in still water deeper than 150 m. High pressure is needed to compensate for methane’s low solubility. So we find methane in deep water traps or even trapped in permanent ice. Trapped methane in hydrates represents the world’s largest energy store that is also a low-carbon resource. This is a significant, but untapped hydrocarbon resource. It has all the attributes to be a major energy supply. But it hasn’t become that yet due to a lack of know-how and experience. But Hydragas will help define methane’s long-term role as a leading global, renewable energy provider. Its contribution will be through its know-how and experience.

Hydragas Energy – Company Description

degassed water during pilot testing on Lake Kivu
Degassing water in the Hydragas Pilot Program

Philip Morkel founded Hydragas Energy originally as a technology developer and licensor. Our company is therefore positioned as a leading gas recovery innovator and solutions provider. We will deploy this capability by developing large-scale methane gas extraction facilities at amenable sites. In this pursuit, Hydragas will undertake to build and operate these plants. We will operate them, producing pipeline gas and gas for power generation.

Power production will be the anchor off-taker and economic value driver. Pipeline gas usage can grow organically, complementing electrical power to domestic, commercial and industrial users. We describe in this post the impact of the project in the region. This is the region of Lake Kivu in DRC and Rwanda. The desired balance is to provide a lower overall cost of energy for all socio-economic strata. Gas and hydro power from the lake will supply them for 50 years and more.

Industry experts recognize our IP and system design capability. They are a technological and solutions breakthrough. Hydragas is therefore a primary enabler of gas-harvesting from water. It has capabilities and plant design well in advance of its peers. The advantages come from extracting gas with the highest recovery and lowest-cost of production. Its plant design enables full compliance to the MPs. It also tops all technical performance indices. So it can therefore lead the way for Lake Kivu’s optimal development.

Technology & Design Objectives

For the lake we have identified the key needs of aligning our design objectives with the Management Prescriptions. This approach has thus allowed us to develop fully compliant designs. Compliance allowed us to optimize methane-from-water recovery solutions from each stratum of the resource.

The design principle is the same for any similar resources. In time we plan to put them into production. So with our design-build extraction plants, we will achieve the most economic gas production for any resource of the type. We can deliver high investment returns with this capability. In fact they can provide leading environmental and social benefits to host countries. Our gas plants also deliver category-leading net energy yields. Therefore, in time, Hydragas should dominate such niche markets for reliable, lowest-cost energy to users.

Initial Opportunity for Hydragas Energy

The Rwanda government has been actively engaging qualified investors. The process is managed through the country utility (REG-EDCL) and the Rwanda Development Board (RDB). They urgently wish to boost gas production from Lake Kivu, which is lagging far behind their long-term planning.

The DRC has been slower to develop, with less clarity on the access to the resource and the agreements required. Their programs were to harvest the shared 2.2 tcf renewable resource in 50 years, starting in 2009. Only 3-5% of the planned output is in production, and only in Rwandan waters.

The countries are obliged to develop capacity equally, on both sides of the lake, in compliance with the rules. To date the capacity-building has lagged due to a shortfall in appropriate technology and design.  Hydragas alone is now fully-compliant with the rules. It has the technology, know-how and ready-to-build design to achieve the governments’ plans.

Funding the Hydragas Energy Programs

To take our proposed next step, we require a $30 m investment fund-raising. This funding is needed now to secure government go-ahead to build a demonstration project, producing 5 MW of clean, renewable power. Hydragas’s 2019 funding program is therefore engaging a number of Canadian government agencies to secure initial investment funds.

Our investment program proposes to raise Series-B equity investment of $10-15 million from private investors. We will then proceed to complete installation of our demo project. Our plan completes commissioning within 15 months of the funding close. Next, we will certify proof-of-performance. We should have the requisite data and analysis after running the demonstration plant for to 3-6 months. We expect the keep the initial demo plant running for many years as a research platform. It continues to provide 5MW of power supply at a commercially solid rate of return.

Funding Commercial Project Opportunities

Hydragas will follow the demo plant with a Series-C fundraising for its first 50 MW commercial plant. As we secure rights, we plan to build further projects sized for 50 -100 MW, depending on access to concessions. We foresee these going into production every 18 to 24 months, subject to demand. They have the potential to produce a total of 800 MW in Rwanda and DRC. However, actual power output will depend on how much of the output is split between power and pipeline gas.

The selection of power plant configuration governs output. Gas-fired plant allows choices between gas engines (49% efficient) and the higher-cost  CCGT (62% efficiency). Total output and capital costs will therefore vary, depending on power plant selections. However, we expect all of these configurations to yield high returns, with high confidence. 

Financial: Modelling Opportunities

The financial models of the demo and commercial projects demonstrate the strong net revenues and rapid build-up of positive cash-flows from the project series. With a demo and three commercial projects in operation, net revenues approach $200 M annually within ten years. With the available free cash flow, further capital projects can be funded with cash-in-hand and some debt.

Planned operating revenue from initial project investments for 10 years
Financial Model Output – 10-year Indicative Earnings and Costs